Using innovation to create competitive advantageAn Intel case study

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Page 1: Introduction

We live in a digital age. Music, video, phone calls, information creation and information consumption are all, by and large, done digitally. A huge proportion of this happens on the Internet.

People use the Internet and its content via computers: As Internet content becomes more sophisticated with, for example, film, music and podcasts, more computing power is needed. The computer chips inside computers need to keep pace with that demand.

Computer chips are essentially collections of transistors - tiny electronic devices that control the flow of electricity to create the 1s and 0s that underpin computing. Intel is the world”s leader in silicon innovation. Silicon is made from purified sand that is super-heated. Produced as a huge sausage-like shape called an ingot, it is sliced into wafers.

Intel is best known for producing the chips that deliver this increased computing power. The chips are manufactured on these wafers. Transistors are the building blocks of computer chips that Intel has been making for 40 years. Intel has been working to make these transistors smaller so that more of them could be fitted onto the same area of silicon, making the chips more powerful. This came at a price. Until recently, the smaller the transistors, the hotter the chips tended to run.

In 2007 Intel developed a breakthrough in the materials used to construct the transistors. Not only can these transistors work faster, they can also do this while generating less heat. Intel has started to use this new material for its latest generation of processors. These are made from transistors only 45 nanometres in size. This means over 2,000 of them could fit on the full stop at the end of this sentence. A 45 nanometer transistor can switch on and off approximately 300 billion times a second. A beam of light travels less than a tenth of an inch during the time it takes a 45nm transistor to switch on and off.

Gordon Moore, Intel's founder, predicted that the number of transistors on a chip will double roughly every two years.

Intel uses 'Moore's law' to inform its development strategies. This case study focuses on Intel”s integrated mix of research and development (R&D) and manufacturing. This enables Intel to implement the 'tick-tock' strategy designed to put it ahead of its competitors and maintain that competitive advantage.